Duke Energy says Carolinas electricity rates would rise by at least 13 percent under President Obama’s plan to address climate change by auctioning off carbon credits. Obama would set the nation’s first limits on emissions of carbon dioxide, the gas linked to global warming. Under an approach outlined in his proposed budget last week, industries and utilities such as Duke would be able to trade allowances to release the gas.

But Duke CEO Jim Rogers, who supports the carbon cap, says Obama is wrong to insist that those allowances be initially auctioned to carbon emitters. Rogers calls an auction a “carbon tax” that would be passed on to consumers, with most of the burden placed on coal-dependent states such as the Carolinas.

“He’s going to create a market that’s going to dramatically drive up the costs for allowances,” Rogers said Monday. “It’s going to be a feeding frenzy.” Allowances auctioned for $15 each would raise Carolinas rates 13 percent in 2012, when the system could go into effect, Duke estimates. A $30 auction price would raise Carolinas rates 27 percent, it says.

Obama’s proposed budget assumes allowances would go for $20 each. Most of the proceeds would be returned to taxpayers as payroll tax credits, with the rest supporting solar, wind and other renewable-energy technology. Duke ranks third-largest among U.S. utilities in releases of carbon dioxide, at about 100 million tons a year.

Rogers, who will appear today at a climate-change conference in Washington, said auction costs would be added to the billions of dollars utilities will spend to replace or retrofit their power plants. He advocates a mix of free allowances and auctions, an approach endorsed in January by some of the nation’s largest corporations and environmental groups. Critics dispute that argument, saying those costs will push energy prices higher regardless of whether carbon allowances are auctioned. They insist that polluters should have to bear the costs of controlling carbon.

“He’s doing what the utilities are going to try to do - scare people,” said Stephen Smith of the Southern Alliance for Clean Energy. “There’s really nothing to show that if Rogers is given this windfall that’s actually going to protect consumers.” The alliance and several allies say 600 economists have signed a petition calling for all allowances to be auctioned. That’s the fairest way to share costs, they say. Read more at icecap.us.

(Icecap note: Smith is doing what most environmental groups and politicans are trying to do - armed with bad science, scare the people into believing carbon dioxide is bad and must be controlled whatever the cost to the consumer, already reeling from a tanking economy, unemployment and shrunken home equity, 401K, pension and IRA values with looming inflation and higher energy prices on the horizon. Their actions are nothing short of criminal.)

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